Assessment of Use of Competency Based Pay System in Enhancing Employees Productivity in State Corporations in Nakuru Town, Kenya

Competency based pay system is very crucial to all organizations and institutions; public and private. Competency-based pay system being offered in the public, which aims to produce capable workers who are responsive to customers' demands by providing quality services, one would expect that there would be improvement on productivity. Thus, this research assessed the use of competency based pay system in enhancing employee productivity in state corporations in Nakuru town. This is against the backdrop of a cry from members of the public regarding underperformance and wastage of tax in the county governments. In spite of exorbitant taxes that are being levied on Kenyans by their respective county governments, there is a deeply-seated feeling that the services rendered to them are below their expectations. The independent variables for the study were skill based pay, performance based pay and the level of employees training on employees productivity which is the dependent variable. It was guided by three theories which include resource based theory, agency theory, reinforcement theory. The study was conducted on 17 state corporations within Nakuru town. The study employed descriptive research design. The target population comprised of the 91 employees attached to human resource department and other heads of other departments of state corporations in Nakuru town. A structured questionnaire was used to collect primary data from the respondents. A pilot test was used to assess both reliability and validity of the research instrument. The collected data was analyzed by use of descriptive and inferential statistics, and with the aid of the statistical package for social sciences (SPSS) software. The study established that skill based pay, performance based pay and training all has significant influence on employee productivity.